10.1. SOME NEGATIVE CONNOTATIONS OF PERFORMANCE APPRAISAL

The problem may lie in the negative connotations of the words "performance appraisal." Appraisal implies evaluation and making judgments as to the quality and quantity of an individual's productivity. To make such an evaluation or a judgment, a certain yardstick has to be available to ascertain whether the individual has measured up to the performance level envisioned by the evaluator. How is one to compare the performance of one individual who has clearly exceeded the low standards he set for himself versus another individual who failed to meet the rather difficult standards she set for herself? Dimensions associated with the yardstick are variable, and procedures available to evaluate many of these dimensions are subjective and often not well understood by the employee or the supervisor.

Would changing the focus from "performance appraisal" to employee "contribution" to the organization make a difference? Would this allow the supervisor to move away from evaluation in a negative sense and move to the concept of employee contribution to the organization? Would this allow the supervisor to say, "Your contribution to the organization has been ..."? The discussion can then move on to how the organization could provide the right environment, support, and resources for this contribution to be increased, and perhaps allow for achieving goal congruence between the employee and the organization objectives.

We often talk about the "success" of an individual and, in turn, the success of the organization in which the individual works. We find that we define success in terms of organization profitability, productivity, or effectiveness. Is it really possible to define "success" without defining "failure"? Has an organization failed if it is not profitable for one year? Has the employee failed if the organization does not stay profitable every quarter, every year? Temporal aspects of success and failure are often overemphasized in organizations. The performance review process is tied too closely to time periods, with the focus on achievements during six months or a year, while R&D organizations need to look at achievements over the long term, say three to five years.

Let us take the case of Employee A, who attempts ten activities, succeeds at eight, but fails two, versus Employee B, who attempts five activities and succeeds in all. Experience clearly shows that the weight given to failure is greater than the weight given to success. Consequently, the probability is very high that Employee B would be rated higher than Employee A by the supervisor. This could be partly due to the emphasis on making judgments and evaluations rather than focusing on employee contribution to the organization. Employee A may in fact have made a considerably higher contribution to the organization than Employee B. In an R&D organization, where the nature of work would naturally include some failures, this example case would point to a fundamental problem in the employee appraisal system. Employees who are risk averse and low performers are likely to get better appraisals than innovative researchers who take initiative and make mistakes.

Recognizing that some of these issues are crucial to enhancing employee contribution to the organization, the first discussion that follows will focus on difficulties with employee appraisal. It is often stated that performance appraisal needs to be linked to the managerial activities and the management system and that performance appraisal should be tied to the stage of development of the organization. These items, along with performance appraisal and organizational productivity, are discussed. Most technology-based R&D organizations are staffed by engineers and scientists. Since there are differences in the goals and aspirations of engineers and scientists, as discussed in this chapter, the concept of employee contribution needs to be differentiated for engineers and scientists.

In an acquisitive and consumption-oriented modern society, monetary rewards could be thought of as the litmus tests for the level of contribution an employee makes to the organization. As seen in the discussions that follow, monetary rewards do not work out as well as one would initially assume. For example, Parboteeah, Hoegl, and Styborski (2005) found that professional development activities, conferences, and customer contacts were effective in increasing employee contributions in an R&D information technology company. So, after discussing performance appraisal in practice and the university department case, we propose a performance appraisal implementation strategy that focuses on employee contributions to the organization.